U.S. crude stocks likely rose 2.2 mln barrels last week.
By Manash Goswami
Brent futures were steady on Tuesday and held above $108 a barrel as a worsening crisis over Ukraine stoked supply disruption fears, while concerns over demand growth from the world's two biggest oil consumers kept a lid on gains.
In the worst East-West standoff since the Cold War, Russia said the United States had spurned an invitation to hold new talks on resolving the Ukraine crisis, the latest instance of attempts of finding a diplomatic solution stalling. The United States will also begin previously planned military training exercises in the region.
Brent futures were unchanged at $108.08 a barrel by 0255 GMT, recovering from a low of $107.83 touched earlier. The contract ended 92 cents down on Monday after two straight days of gains. U.S. crude inched 6 cents higher to $101.18 after settling $1.46 down at $101.12, its lowest since Feb. 14.
"The market is driven by geopolitical factors rather than fundamentals, and it is therefore difficult to point to a clearer direction for prices," said Tetsu Emori, a commodity fund manager at Astmax Investment. "There is some pressure from the weak Chinese economic data and as the weather pattern improves in North America."
Indicating a weak demand outlook, U.S. crude inventories are expected to have risen last week as the bitter cold spell ends and as refiners take down plants for scheduled maintenance after meeting peak demand. That forecast followed data from China showing a sharp drop in exports, pointing to weakness in economic activity.
Other risk assets such as Asian markets and base metals found their feet after a rocky ride the previous session, though uncertainty about the true state of China's economy kept the mood brittle.
The pull and push factors are likely to keep the U.S. benchmark trading between $98 and $105 a barrel, keeping the European benchmark about $7 more expensive, Emori said.
Oil is also drawing support from the worsening crisis in Libya. The north African nation stopped a North Korean-flagged tanker that had loaded oil from a rebel-held port, after naval forces briefly exchanged fire with the rebels, officials said.
But in a sign of the chaos and conflicting information typical for Libya, rebel leader Ibrahim Jathran denied in a televised statement broadcast from a ship that he had lost control of the oil tanker.
A preliminary Reuters poll taken ahead of weekly inventory reports from the American Petroleum Institute (API) and from the Energy Information Administration (EIA), showed crude stocks climbed 2.2 million barrels on average for the week to March 7.
Gasoline inventories were seen down 2.2 million barrels. Distillate stocks, which include heating oil and diesel fuel, are projected to have fallen 1.1 million barrels.
Refinery utilization for the week ended March 7 was expected to have dipped 0.5 percentage points on average from 87.4 percent of total capacity in the preceding week in part due to maintenance programs.